Payday Loans - Informal Faq

By: Apurva Shree

There are a large number of misconceptions about payday loans. People feel that such loans are extremely expensive and nothing but hidden debt traps as they lead to borrowing money at rates that on paper read close to 400%. Is this really so? We'll look at some facts and misconceptions about quick online payday loan here and leave it to the reader to decide what is true.

Meeting A Need

Payday loans are available in the market because they service a very real need and have made a certain degree of financial freedom and security available to people. Suppose you are reasonably well employed, have a decent track record of steady salary being credited to your account and fulfill citizenship criteria etc., should you not have recourse to borrowing money to meet an urgent need? How does credit rating matter? A quick payday loan is an easy option available to help out people who meet the criteria listed above.

How do payday loans work? The method is simple. You borrow money from a store or a money lender and pay a small charge for the service. How much is the charge? Generally, you pay around $15 for the privilege of using $100 of the store's money for a month. If you are really stuck for $500 to $1500, this may not be too much of a charge. A payday loan can in some circumstances be a really lifesaver if it allows you to get out of a jam or to take advantage of some valuable opportunity.

Consider Some Options

Have you considered asking friends and relatives for a loan? Offer to pay your acquaintances the interest they will lose if they withdraw money from their bank for you. It will anyway be cheaper than a payday loan.

An online payday loan works best for you when you are able to repay within the defined period and do not roll over your loan. In fact while availing payday loans, you should also find out if there is any penalty for pre-payment. This should also form an important parameter in your decision criteria. It is also very important to pull your belt in by a few notches before you take any loan. Make the largest payment out of your own savings before asking for a payday loan. This alone will ensure that your financial health stays OK.

Payday Loans
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